Marc Zaransky Explains How COVID-19 has Impacted the Auto Industry
The COVID-19 pandemic is producing many economic, political, and social disruptions, as major industries from finance to airlines have already felt the impact. The latest casualty: the U.S. auto industry.
Spring is normally the most popular time to buy a car, but with more people staying home in self-isolation during the pandemic, car sales have suffered. According to Counterpart Research, automotive productions during the month of March saw a 39% decrease from the previous year — a record low for March in over a decade. The biggest losers in relative volume terms are Chevrolet, followed by Toyota, Nissan, and Honda, which have declined by over 60,000 units each.
April and May will continue to see lows due to the impact of COVID-19 for the auto industry. Marc Zaransky, owner of a successful family-operated auto business has grown to be Illinois’ largest independent leasing company with operations in all 50 states, explains three ways COVID-19 is directly making an impact on the U.S. auto industry.
1. Production Stoppage
As mentioned, automotive productions during the month of March dropped 39% from the previous year. With the U.S. being the epicenter of COVID-19, automotive production stopped entirely with automakers GM, Ford and FCA. They have not announced any specific dates for re-opening their plants. Other automakers Honda, Toyota, and Hyundai planned to re-open their North American plants by mid-April, however, considering the situation, these automakers have extended the closures.
2. Reduced Consumer Demand
The global outbreak of COVID-19 has brought communities to a near standstill. With more people staying home in self-isolation, the consumer demand for vehicles has significantly decreased on a global level. Although we are in the first phase of this pandemic crisis, the current estimated global impact is a 17% to 29% decline in 2020 global car sales.
3. Dampened New Vehicle Sales
As a result of the reduced consumer demand, new vehicle sales will inevitably decrease in the short-term, notes Marc Zaransky. In fact, in early April, Fiat Chrysler (FCAU) announced that its first-quarter sales in the United States fell by 10% despite a jump in sales over the first two months of the quarter. Additionally, General Motors (GM) reported a 7% drop in sales for the quarter, which the company attributed to the drastic decline in March sales because of the COVID-19 outbreak.
In the longer run, these trends could trigger a shift in consumer preferences altogether, just as other global events with significant economic implications have done (e.g., wars, oil price swings, etc.).
Marc Zaransky on the Way Forward
In a time of global uncertainty, it’s easy to lose track of the big picture. However, what’s needed now is more focus on the opportunity. Marc Zaransky encourages companies in the automotive industry to start differentiating capabilities they need to thrive — especially in a crisis.
